Decoding American Airline’s Elite Rewards for 2012

A fan of the blog sent me the following e-mail that he received from AA.com. I knew AA had announced the return of their “Elite Rewards,” but this is the first marketing I’ve seen for it.

I decided to dive in and see if I can compare the different offers to determine which is the best to take.

The options are:

  1. 15,000 miles. These are hard to assign a dollar value to (by design). A one-way flight can cost as little as 12,500 miles, so I guess you can consider it a little more than a one-way flight at off-peak travel times. If I had to put a dollar value on it, I’d probably say $200 based on my normal travel.
  2. 4 upgrades. You can buy each upgrade for $30, or 8 upgrades for 35,000 miles.  This means that 4 upgrades are worth $120 or 17,500 miles. In a miles comparison, these upgrades are worth more than the 15,000 miles you can get. But if you take the miles, you always have the flexibility to use them later to buy upgrades.
  3. 2 one-day passes to an Admirals Club. These normally cost $100. Unfortunately, there’s no true equivalent to miles since you can only buy annual memberships with miles (65,000 for Gold and 55,000 for Platinum). We can look at it this way though: if you are Gold, an annual membership costs $450. Dividing the 15,000 miles into the 65,000 mile cost, we find that they are basically worth a $104 discount toward your new membership. Roughly the same, dollar-wise.
  4. A 10% discount on travel. This is only worth about $70 to me because I’d never pay for a ticket that costs more than $700. Instead, I’d use miles for the trip. I guess if you are buying travel for a family of 4, this can add up to a good discount.

In summary:

  1. Miles = $200
  2. 4 upgrades = $120
  3. 2 Admirals Club passes = $100
  4. 10% discount on travel = $70 (for 1 person)

All things considered, it’s obvious that American has done a lot of math to make the value of these offers very similar. The neat thing about it is that they are letting the member decide which is the best fit for their travel style.

The 15,000 miles is probably the best option for me. A traveler who is Gold and covets upgrades should probably take the 4 upgrades. If you travel as a family, the 10% discount can add up to a big discount pretty fast. Just keep in mind that miles are the most flexible option because you can trade them in later for the other offers.

Also, since the 4 upgrades are a firm price and can easily be converted to money, it’s reasonable to assume each mile is worth $.00686 USD. This is the number I use when evaluating whether to use miles or cash to book flights.

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